Original author: Sean Stein Smith
Translator: Katie Gu
Cryptocurrency prices will continue to maintain steady growth in the second half of 2020. In the face of ongoing global political and economic instability, some people say that this has been regarded as a soaring price. This is indeed good news for cryptocurrency investors and those who have always believed that cryptocurrencies will be in a long-term bull market. But price growth may also be just a bubble, with unintended consequences.
Before we begin to speculate about the meaning behind the growth of cryptocurrency prices, we need to understand the earth-shaking changes that have taken place in the cryptocurrency world since 2017. With the burst of the Bitcoin price bubble at the end of 2017, the blockchain and encrypted asset industry began to conform to market demand and develop several alternative products with a truly decentralized and distributed nature of Bitcoin. Stablecoins, DeFi, DAOs, and central bank currencies (CBDCs) are just a few of the blockchain applications that have emerged in the so-called cold winter of cryptocurrencies.
The cryptocurrency winter may really be coming to an end, or it may be over, but what does the continuously increasing price mean for the medium and long-term development of crypto assets? Let’s watch it together.
Cryptocurrency prices are highly volatile
First, when the price of cryptocurrency continues to grow, the interest of outsiders in using cryptocurrency as an alternative to fiat currency may decline. Simply put, when outsiders see price growth and liquidity in the cryptocurrency market, their confidence in accepting these financial instruments as a medium of exchange may be shaken. The development of stablecoins is to solve the problem of price liquidity, market price fluctuations arise, and stable encrypted assets have emerged.
Bitcoin may not be as volatile as other financial instruments. But after all, Bitcoin is also one of the financial tools, which still worries many consumers and potential users.
Stablecoins will be on top
The rise of stablecoins and market valuation should not be ignored. Don’t underestimate it because it is not a “real” cryptocurrency. Stablecoins are an important “bridge” between cryptocurrency enthusiasts and a large number of outsiders. The ability to reduce price volatility, the nature of transactions or the ability to redeem related assets, and the recent OCC certification (currency audit) regulatory measures on these assets have highlighted the feasibility of stable currencies.
Cryptocurrency use cases
After all, cryptocurrency is a tool developed in response to market development. It can be concluded that the development of the cryptocurrency field will be similar to other financial instruments. When talking about stablecoins and central bank currencies, it is obvious that these changes have already begun. To put it simply, the future of cryptocurrency may no longer be a “winner takes all” situation, but more depends on the use cases in differentiated markets.
Large-scale landing is coming
Discussions around the blockchain and cryptocurrency are constantly going on on various issues of individuals and national institutions, so the wider implementation of the blockchain is just around the corner. Although tokenized fiat currencies are also in the development process, they are not “real” cryptocurrencies because they are still issued and managed by the central government or central bank. Cryptocurrency fanatics may see the long-awaited large-scale landing scene, but it may not be the form of decentralization like Bitcoin.
Just like any other business or agreement, compromise and application are required, and decentralized cryptocurrency will always be an important role.
Cryptocurrency security will be the top priority
The future development of finance and payment will be greatly affected by blockchain and encrypted assets, and the regulatory framework needs to keep up. In particular, even if stablecoins and other cryptocurrencies are widely accepted, the need for security tools, other anti-theft mechanisms, and unethical behavior will be important topics of discussion. In September 2020, the OCC (Currency Audit) and the US Securities and Exchange Commission (SEC) have already taken action on this. To solve the existing problems, stricter certificates and perfect policies are necessary.
Bitcoin is still the hottest cryptocurrency, any fluctuations can set off a huge wave in the market, which also continues to attract individuals and institutions to start paying attention to crypto assets. In order to fully develop and improve, all parties must recognize the impact of continued price fluctuations on the cryptocurrency industry.
Up to now, price fluctuations and cryptocurrencies have continued to occupy the top of the financial hot topics list, but the possible impact is broader, far beyond the scope of short-term transactions. In the face of price fluctuations, assessing the status of cryptocurrency is a choice that every interested organization or cryptocurrency investor should make when the industry continues to accelerate and mature.
